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Fitch Ratings has downgraded $3.6 billion of Metris’ credit card backed securities and has placed the notes on “Rating Watch Negative.” Fitch says reported gross losses have been consistently above 20.0% since the beginning of the year, averaging 21.26% year-to-date in 2003 compared to 15.82% in 2002 and 12.79% in 2001. While delinquencies have shown some stabilization and a slight improvement in recent months, they remain at high levels, indicating that trust losses are unlikely to recede over the near-term. Fitch also says it is increasingly concerned over eroding excess spread levels, which have fallen to historical lows, and increased the risk of early amortization. Excess spread levels have declined significantly over the past few months, and for many series are below 2%, as rising loss rates continue to offset the trusts lower funding costs. At June 2003, one-month and three-month average excess spread stood at 1.14% and 1.93%, respectively.

Catuity has been issued an Australian patent and a New Zealand patent for “Integrated Point-of-Sale” and “Internet Multi-Application System.” These two patents have counterparts in other countries pending, build on the above patent technology, and generally cover the use of the system over the Internet and traditional point of sale devices. A US patent for a “Data Carrying Device and Systems,” which contains 26 allowed claims was also issued. This patent covers the efficient use of memory space on smart cards (and other data carrying devices) to store data for multiple applications and the systems to manage applications, devices and terminals. A similar patent has already been issued in Australia covering this technology.

PA-based USA Technologies has been issued four more patents including one for “e-Port” terminals installed in gas pumps. The latest patents issued from the U.S. Patent and Trademark Office brings to nearly 100 patents granted or pending for USA Technologies, making it also a leader in the number of patents for a small/medium sized company. Among the patents is one that covers interactive e-Port terminals installed in gas pumps that allow customers to make add on purchases over the Internet via a miniature LCD screen while pumping gas. Customers using the gas pump e-Port terminal will be able to check e-mail, the news, weather, and sports.

The top supplier of VISA and MasterCards reported it delivered more than 28 million microprocessor cards during the second quarter including 11.2 million smart payment cards. Oberthur Card Systems reported total 2Q/03 revenues of $111.1 million, a 5.6% decline over 2Q/02 (at constant exchange rates). Second quarter revenues for smart payment cards increased 5.4% to $22.3 million. However, sales of banking magnetic stripe cards, loyalty cards, scratch cards and memory cards declined 29.7% to $19.9 million. Sales of SIM and ID cards for the second quarter totaled $42.9 million. Oberthur says the decline was due to its voluntary withdrawal from memory card activities as well as from the decrease in the value of the dollar versus the euro. But, sales of magnetic stripe cards has been stable despite the migration towards smart cards.

Euronet Worldwide reported second quarter consolidated revenues of $48.1 million, a 175% increase over the second quarter 2002, driven by its new e-pay prepaid processing segment. Second quarter revenues for prepaid processing segment were $32.2 million. Total transactions processed in the second quarter were 22.8 million. e-pay processes electronic prepaid transactions at more than 50,000 point-of-sale terminals located in the U.K., Australia, Malaysia and New Zealand. The EFT processing segment posted second quarter revenues of $12.2 million, a 5% decline over 2Q/02. The decrease reflects the January sale of the the U.K. ATM network. The EFT processing segment processed 27.1 million transactions in the second quarter, compared to 18.7 million transactions for the same period last year. At the end of the second quarter, Euronet had 3,120 ATMs owned and/or operated as compared to 2,840 ATMs at the end of the second quarter of last year. Euronet owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech Republic, the U.K., Greece, Kosovo, Slovakia, Egypt and India.

Smart card specialist Gemplus reported that its second quarter revenues increased nearly 12%, and that gross profit jumped 27% over the first quarter. However, second quarter revenues of $197.2 million, are about 18% lower, and gross profits of $54.7 million are slightly lower than one year ago. Also, Gemplus posted a $94.3 million net loss for 2Q/03 compared to $43.4 million in the prior quarter, and $140.8 million one year ago. The company reported that smart cards for banking and retail applications rose 54% quarter-on-quarter. EMV shipments nearly doubled compared with the first quarter and more than tripled compared with the same quarter a year ago. Sales were mainly driven by the UK market, but also supported by South America and Asia. During the second quarter, the EMV migration in the UK accelerated with the delivery of 15 million EMV smart cards. Gemplus also became a major player in the EMV migration in Malaysia during 2Q/03.

Los Angeles-based TSO has signed an agent agreement to purchase 2,000 stored-value cards from Las Vegas-based C.E.C. Industries to market to the Hispanic community, Evangelical organizations, and multi-level marketing organizations. C.E.C. Industries Corp. is a Nevada Corporation in good standing that has entered the business of providing a suite of cash-based debit cards and stored value cards for ATM and debit “point of sale” transactions. The Company believes a multi-functional stored value product will fill a void in payroll and consumer payment services.

American Express’ international card volume is growing at an annual rate of 11%, slightly faster than the growth in domestic card volume. Also, during the second quarter, AmEx added 500,000 new cards-in-force to its international card portfolio compared to 300,000 new cards-in-force for the USA. At the end of the second quarter, AmEx had 22.9 million cards-in-force outside the USA, an 8.2% increase over 2Q/02, while the domestic cards-in-force of 35.7 million were up 2.8% over last year. The international card growth is driven by growth in both proprietary and network partnership cards. During 2Q/03, AmEx launched the “Centurion Card” in Mexico, and issued the “Union Bank American Express Green” and “Gold Credit Cards” through a network agreement with Union Bank in Pakistan. The issue also signed an agreement with Consors Discount Broker AG in Germany, a subsidiary of the French Bank BNP Paribas and the leading direct broker in Europe, that will allow Consors to sell American Express Cards and to become an integrated “Membership Rewards” partner. Closer to the USA, AmEx signed a partnership with Air Canada to have Aeroplan become a partner in the “Membership Rewards” program and to develop a range of co-branded charge cards for consumers and corporations.

Austria-based CLEARjet GmbH has teamed with Kanematsu USA to market is thermo-re-writable printer for smart cards in the USA. The CLEARjet products allow for the reuse of smart cards, contactless cards, or magstripe cards. CLEARjet PVC cards are made with a special rewritable film that is activated by the printer and can be reprinted up to 500 times. The printer offers resolution of 300dpi and can be used to print text information, pictures, and barcodes. CLEARjet produced the “Kepler Card” student ID in Austria which also functions as a bankcard. The company also produced electronic ticketing smart cards for the Rhine-Rhur transport association, one of Europe’s largest Transport Authorities. More than 1.6 million of these rewritable smart cards are in use which are targeted at different demographics. For example, the “Firmen Ticket” for companies, the “Young Ticket” for apprentices and young people, the “Chocolate Ticket” for school kids. Kanematsu USA Inc is a supplier of ID card printing products since 1994.

TSYS announced plans this week to build a new European data center in Knaresborough, UK to replace the existing data center in Harrogate, UK. Preparation for the data center has begun, and the center is scheduled to be completed and operational by fourth quarter 2004. The data center will be built on 3 acres and will contain 15,000 square feet for offices.

Equifax agreed to pay $250,000 to settle FTC charges that its blocked-call rate and hold times violated provisions of an FTC consent decree that settled a 2000 lawsuit for violations of the FCRA. That lawsuit settled charges that Equifax did not have sufficient personnel available to answer the toll-free phone number provided on consumers’ credit reports. The FCRA is designed to promote accuracy, fairness, and privacy of information in the files of every consumer reporting agency.

VISA this morning announced it is merging its “Classic,” “Gold,” and “Platinum” cards into one consumer credit card platform governed by one set of operating rules. The move will give VISA issuers complete latitude in differentiating their card products, and will extend some upgraded benefits to all VISA consumer credit cardholders. For example, in an industry first, VISA will now provide “Auto Rental Insurance” coverage to all consumer credit cardholders. The move will give ARI coverage to 110 million additional VISA cardholders. The merger of the products will also give issuers the advantage of not having to change card numbers whenever upgrading a customer’s card. VISA will continue to offer its issuers a menu of 16 managed enhancements. The convergence of the “Classic,” “Gold,” and “Platinum” VISA cards will become effective March 1, 2004. The lines between the card products have become more blurred over the past three years as some sub-prime issuers, such as Capital One, now offer “Platinum” cards with $300 credit lines. The penetration of “Platinum” cards in the USA has now reached 62 million households, nearly 60% of all households. MBNA and First USA pioneered the “Platinum” cards among VISA and MasterCard issuers in 1996. (CF Library 2/29/96)